3.4 Key points are here!

Intercontinental Oil & Gas (600759) Brief Note: On Monday of this week, the first trading day after the US-Israel-Iran conflict, in fact, funds flowed out from many sectors. However, because the market’s upward trend was driven by precious metals and oil & gas sectors—many of their constituent stocks—indices stubbornly turned red and recovered. On Tuesday, as oil & gas and other sectors continued to hit new highs, especially when the three major oil companies hit daily limit-ups, the index reached a recent high. But market sentiment was also nearly exhausted, and the later rally in precious metals and oil & gas began to cash out and exit. This triggered the first round of decline in the broader market. Later, funds flowed back into oil & gas and precious metals, helping the index recover close to turning red again. However, in the Tuesday afternoon, strong short-selling forces persisted, also causing earlier tech sector quantitative passive stop-loss orders to be triggered, leading to accelerated decline and ultimately a volume-driven bearish engulfing pattern.

In summary, the current market main theme is oil and natural gas, but overall, the market remains tense. When the support for oil & gas—currently the main driver—loses continued favor, a correction in the index becomes natural. Next, let’s analyze the index levels and sentiment cycles:

1. Index Cycle Thinking:

Looking at trading volume, the index again saw over 100 billion in volume, indicating that funds are still entering the market for speculation. This is a positive variable for the index. On the downside, the index closed with a volume-driven bearish candle that engulfed Monday’s bullish candle, suggesting there may be lower points ahead. However, as US-Iran tensions gradually ease, the market will likely return to rationality. The market probably will experience volatility, with the possibility of new lows, but this is part of the index cycle analysis.

2. Sentiment Cycle Projection:

First, Long-term Analysis: The leading stock YuNeng Holdings, which rose before the Spring Festival, continued until Tuesday, when it pulled back and turned green, marking the end of the short-term cycle. Meanwhile, sectors like computing power also started to cash out collectively, as YuNeng represents the computing power concept. Looking at Hang Electric, as long as it stays above the five-day moving average, YuNeng still has a chance to trend upward, though this cannot be fully ruled out. Additionally, recent market streaks of continuous daily limit-ups have not exceeded three days, indicating increasing difficulty in continuation, so rhythm should be monitored more carefully. When YuNeng plunged, funds continued to flow into oil & gas sectors, indicating that the new main theme is oil and natural gas. The focus should now be on the core of oil & gas.

Second, Opportunity Analysis: The biggest news last weekend was the US-Israel-Iran conflict, along with developments in computing power and energy storage. Ultimately, market funds favored the US-Iran conflict theme, leading to collective rises in oil & gas, mineral stocks, etc., which fermented after Iran’s tough stance on Tuesday. However, as oil & gas stocks declined after Tuesday afternoon, it signaled that market sentiment had peaked. Future developments in conflict-related concepts are likely to follow a pattern of weakening the weak and supporting the strong. Be cautious here. Besides, the market’s remaining bullish sectors are limited to agriculture, shipping, and a few others, while most sectors are declining. The volume decline indicates some funds are reallocating, but since volume is still present, it also suggests participation and support from investors—likely driven by external geopolitical tensions. Therefore, the market outlook remains optimistic: as oil & gas diverges, funds are expected to flow back into other sectors for rotation.

For Wednesday, focus on the order book of leading oil & gas stocks. If buy orders increase, there is potential for continued rotation; if not, focus should shift to core stocks. Overall, the later the oil & gas stocks, the higher the aesthetic standards should be. Besides the main oil & gas theme, the focus on the Two Sessions topics remains relevant, such as new energy storage, perovskite batteries, precious metals, and chemical sectors showing signs of price recovery.

Special Reminder: The above information is for reference only and does not constitute investment advice. No stock recommendations are provided! Investing involves risks; please proceed with caution!